Bills to Delay, Amend or Repeal the Affordable Care Act's Excise Tax

Delay, amendment or repeal of the Affordable Care Act’s 40 percent excise tax on high-cost plans, also known as the “Cadillac Tax,” is becoming more likely as Congress moves through its agenda in December. Three potential paths are possible:

Repeal Several bills have been introduced to repeal the excise tax, including HR 2050, HR 879, S 2045 and S 2075. While these bills are not being considered as separate legislation, they could become part of other legislation moving through Congress.

Reconciliation On October 23, 2015, the House passed budget reconciliation legislation which would repeal key provisions of the Affordable Care Act, including the employer shared responsibility penalty, individual mandate to purchase health coverage, the 40 percent excise tax, W-2 reporting of health coverage, and the medical device tax. The bill, Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (HR 3762), was passed by the Senate, with amendments, on December 3, 2015.

The Senate-passed bill would go further than the House version to dismantle the Affordable Care Act, by eliminating the premium assistance tax credits used by individuals to subsidize coverage on the health insurance Exchanges, and terminating the Medicaid expansion at the end of 2017. The Senate also recorded a 90 to 10 vote to permanently repeal the excise tax.

The House will now either pass the Senate version or send the bill to a conference committee to resolve the differences between the two versions. The bill will then be sent to President Obama, who has promised to veto it. Although this bill will not become law, the strong showing of bipartisan support for the repeal of the excise tax bodes well for future repeal efforts.

Government Funding & Tax Extenders Congressional negotiators are working on legislation to fund the federal government through this fiscal year and extend tax provisions that are scheduled to expire at the end of 2015 (known as the “tax extenders” bill). The 40 percent excise tax is being discussed as part of these negotiations. In particular, negotiators are looking at a two-year delay or repeal. Congressional leaders have stated that they would like to resolve this effort by December 11, 2015, which is the date a stopgap measure funding the federal government is set to expire.

Segal will provide information about further developments.

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